Issues and Challenges Facing Islamic Banks and MSME in Financial Inclusion in Indonesia

2021 ◽  
pp. 308-325
Author(s):  
Adi Saifurrahman ◽  
Salina Kassim
Keyword(s):  
Financial Services ◽  
Developing Nations ◽  
Primary Objective ◽  
Financial Inclusion ◽  
Islamic Banking ◽  
Critical Issues ◽  
Banking Institutions ◽  
Banking Institution

Financial inclusion has become an important policy for many countries, including the developed and developing nations. Financial inclusion realisation is promoted by the easy and convenient access to financial services, quality of financial services, and efficient and effective utilisation by all segment of society, delivered with fairness and zero discrimination. The achievement of financial inclusion is supported by essential pillars that are interconnected with each other and form a composite economy ecosystem to ensure stability and sustainable development. One of these critical pillars is micro, small, and medium-sized enterprises (MSMEs); the development of MSMEs pillar is deemed crucial due to its capability in absorbing more considerable workforce compared to larger enterprises and contributes significantly to the gross domestic product (GDP). Therefore, the growth of MSMEs pillar will surely reduce poverty, lessen the unemployment, and lower the income disparity. In this respect, since Islamic banking represents the core of the Islamic financial system that encourages entrepreneurship, the institution is expected to take the lead in serving the needs of MSMEs sector and assisting them from all types of financial constraints. The primary objective of this chapter is to explore and investigate the critical issues and challenges of MSMEs financial inclusion achievement through the role of Islamic banking institutions, particularly in Indonesia. The chapter suggests several problems that hamper the role of the Indonesian Islamic banking institution in serving the needs of MSMEs and numerous issues and challenges in achieving MSMEs financial inclusion.

scholarly journals role of technology in improving the financial inclusivity of banking institution: literature research with Indonesian case

2021 ◽  
Vol 4 (1) ◽  
Author(s):  
I Gst Ngr. Alit Asmara Jaya ◽  
Ida Bagus Putu Purbadharmaja
Keyword(s):  
Financial Services ◽  
Financial Institution ◽  
Qualitative Description ◽  
Improve Performance ◽  
Role Of Government ◽  
Banking Institutions ◽  
The Government ◽  
Banking Institution ◽  
Role Of The Government

This article was written to see how technology plays a role in improving the financial inclusiveness of banking institutions and the role of government and regulator as well. Technology that has grown rapidly in recent decades has been able to make rapid progress in the industry and change people's behavior. Technology is becoming an inevitability that encourages progress in the economy. Banking as one of the supporting sectors of the financial institution industry, need to do efforts continuously to develop through innovation in fulfilling the needs of financial services, in order to improve performance with the application of technology. Using the approach of literature review and former empirical study, the author tries to perform qualitative description analysis of technological role in increasing financial inclusiveness of banking institution and role of the government and regulator as well. The results show that technology has an important role in boosting strategy to increase financial inclusiveness through improving financial performance. Regardless of the role of government and regulator to create condusiveness of the such technological role.

Harmonising Microfinance With Islamic Banking

2020 ◽  
pp. 240-258
Author(s):  
Shahab Aziz ◽  
Maizaitulaidawati Md Husin ◽  
Muhammad Ashfaq
Keyword(s):  
Financial Services ◽  
Small Businesses ◽  
Commercial Banks ◽  
Financial Inclusion ◽  
Islamic Banking ◽  
Microfinance Institutions ◽  
Related Services ◽  
Banking Institutions ◽  
Islamic Microfinance

While microfinance institutions play a role in the provision of financial services to individuals and small businesses that lack access to banking and related services, the question is: Can this role be taken up solely by the banking institutions? This chapter discusses the performance and application of microfinance institutions and challenges in developing a sustainable microfinance environment. The chapter deliberates the importance of integrating Islamic microfinance with Islamic commercial banks. It is argued that the integration of Islamic microcredit into the banking and credit schemes of Islamic commercial banks and Islamic microfinance institutions is a key to promoting financial inclusion. In addition, the chapter discusses how the Islamic microfinance model can be applied towards improving and humanising society and suggests strategies to improve the sustainability of microfinance institutions.

Acceleration of Financial Technology Growth towards Inclusiveness of Unbankable Society in Achieving the Vision of the Islamic Banking Roadmap 2020-2025 (Case Study: Generation Z, Jabodetabek)

2021 ◽  
Vol 4 (2) ◽  
pp. 158
Author(s):  
Ahmad Zikry Fadillah
Keyword(s):  
Financial Services ◽  
Quantitative Research ◽  
Population Based ◽  
Digital Economy ◽  
Financial Inclusion ◽  
Islamic Banking ◽  
Generation Z ◽  
Use Of Technology ◽  
Technology Services

Indonesia's digital economy continues to experience positive growth. The growth of the digital economy causes the volume of digital banking transactions to continue to increase. This shows the potential in utilizing the fintech market to the fullest. However, this market has not been utilized properly because there are still unbankable people who have not been accessed by banking services. The presence of fintech is expected to be a solution to target the unbanked population. Based on the existing potential, fintech has the opportunity to be developed to increase the financial inclusion of Islamic banking in accordance with the 2020-2025 Islamic Banking Roadmap in Indonesia. With the largest Muslim population in Indonesia and through the role of Generation Z, which is a generation that grew up in the digital era, this can be a potential in increasing the role of fintech as an effort towards inclusiveness for the unbankable community. With the increase in community inclusiveness, it can encourage the acceleration of the development of Islamic banking. This study aims to optimize the role of fintech development in Islamic banking in achieving the objectives of the 2020-2025 Islamic Banking Roadmap in Indonesia. The method used in this research is quantitative research with data collection techniques through literature reviews and questionnaires. The results show that the majority of Generation Z have access to good fintech financial services. Thus, generation Z has a role in increasing the financial inclusion of Islamic banking through the use of technology services, namely fintech, so that in the end, increasingly inclusive banking finance can support the achievement of the vision of the sharia banking roadmap that has been launched by the OJK.

scholarly journals Sharia Financial Technology in the Development of Bankable Micro Businesses

2020 ◽  
Vol 11 (6) ◽  
pp. 203
Author(s):  
Nunung Rodliyah ◽  
Recca Ayu Hapsari ◽  
Aditya Mahatidanar Hidayat ◽  
Lukmanul Hakim ◽  
Ade Oktariatas K
Keyword(s):  
Financial Institutions ◽  
Financial Inclusion ◽  
Major Influence ◽  
Islamic Banking ◽  
Financial Industry ◽  
Lower Middle Class ◽  
Islamic Financial Institutions ◽  
Banking Institutions ◽  
Financial Technology

Fintech is one of the drivers of the existence of a movement to improve MSME finance, especially the lower middle class through Islamic financial institutions. The development of digital technology, including in the Islamic financial industry, has had a major influence with the existence of financial technology (fintech), all forms of transactions are faster, easier, and more efficient, without the need to meet in person. Financial technology collaboration with Islamic financial institutions, especially Islamic banking can increase financial inclusion at MSMEs in Indonesia. The implementation of Fintech in the Islamic banking industry will facilitate and bring business players closer, especially MSMEs to access Islamic financial service products offered and apply for financing directly without having to go directly to the branch offices. Such a model, in addition to making it easier for MSME sector business people to gain financial access, can also improve financial inclusion and improve the performance of Islamic banks. Efforts to increase the capacity of micro businesses that were originally unbankable can be increased to bankable. Where the role of related institutions such as banking and fintech, which is currently becoming popular in the community, can contribute and build micro businesses to become more independent and encourage economic development in Indonesia with the collaboration of banking institutions and micro businesses in financing.

scholarly journals PERLINDUNGAN "HAK SPIRITUAL" DALAM PENYELESAIAN SENGKETA PERBANKAN SYARIAH: PRAKTIK DI MALAYSIA DAN INDONESIA

2016 ◽  
Vol 5 (2) ◽  
Author(s):  
Rof'ah Setyowati
Keyword(s):  
Financial Services ◽  
Comparative Approach ◽  
Islamic Banking ◽  
Constitutional Court ◽  
Legal Research ◽  
Joint Research ◽  
Banking Institutions ◽  
Banking Institution ◽  
The Right ◽  
Settlement Of Disputes

"Spiritual right" is the right in the spiritual aspect that is owned by any person. The Spirituality of Muslim customers is influenced by sharia principles in various aspects of their lives. The protection against "spiritual right" is also required in the settlement of disputes between customers and Islamic banking institution. Indonesian regulation has provided the foundation for the protection of the spiritual rights. The issuing of the MK (Constitutional Court)'s verdict Number 93/PUU-X/2012, can also lead to that purpose. However, there is still a "spiritual right" post the verdict. This study utilizes two types of joint research method called socio-legal research. It employs several approaches, namely philosophical, historical, critical, analytical, comparative, and so on. However, the most prominently used is the comparative approach as it is associated with the purpose of this study in digging Malaysian experiences with its longer period of having various legal problems. It is hoped that these experiences can be referred to as a pattern for more effective "spiritual right". The analysis shows that the effectiveness of the "spiritual right" protection in settling the dispute of Islamic banking institutions is dominantly influenced by the policy of financial services authority, which in Malaysia is Bank Negara Malaysia (BNM) and Otoritas Jasa Keuangan (OJK) in Indonesia. ========================================================================================================"Hak spiritual" merupakan hak dalam aspek spiritual yang dimiliki oleh setiap orang. Spiritulitas konsumen Muslim dipengaruhi oleh prinsip-prinsip syariah dalam berbagai aspek kehidupannya. Perlindungan terhadap "hak spiritual" juga dibutuhkan dalam penyelesaian sengketa antara nasabah dengan institusi perbankan syariah. Melalui peraturan perundangan, telah diberikan landasan bagi perlindungan "hak spiritual". Munculnya Putusan MK Nomor 93/PUU-X/2012, hakekatnya juga mengarah pada maksud tersebut. Namun permasalahannya, pasca putusan MK tersebut, masih terdapat "hak spiritual". Kajian ini menggunakan dua jenis penelitian gabungan, yang disebut dengan socio-legal research. Beberapa metode pendekatan dilakukan, antara lain: filosofis, historis, analitis kritis, dan komparatif. Namun yang paling menonjol digunakan ialah metode komparatif. Penggunaan metode ini dikaitkan dengan tujuan kajian ini untuk mengambil pengalaman dari Malaysia yang lebih lama dengan berbagai problematika hukum yang ada, untuk manjadi acuan guna mendapatkan pola perlindungan "hak spiritual" yang lebih efektif. Hasil analisis ini menujukkan bahwa efektifitas perlindungan "hak spiritual" dalam penyelesaian sengketa perbankan syariah sangat dipengaruhi oleh kebijakan lembaga pemegang otoritas pembinaan, pengawasan dan pengaturan perbankan syariah. Dalam konteks ini, di Malaysia ialah BNM, sementara di Indonesia ialah OJK.

scholarly journals IMPLEMENTATION OF ECONOMIC DEMOCRACY PRINCIPLE IN ISLAMIC BANKING POLICIES THROUGH FINANCIAL SERVICES AUTHORITY (FSA) IN INDONESIA

At-Taradhi ◽  
2018 ◽  
Vol 8 (2) ◽  
pp. 78 ◽  
Author(s):  
Yusup Hidayat ◽  
Fokky Fuad ◽  
Maslihati Nurhidayati
Keyword(s):  
Financial Institutions ◽  
Financial Services ◽  
Primary Source ◽  
Local Economy ◽  
Islamic Banking ◽  
Economic Democracy ◽  
Regulation And Supervision ◽  
Wide Range ◽  
Banking Institutions ◽  
Banking Institution

Abstract: The enactment of Law No. 21 Year 2011 on the Financial Services Authority (FSA) made the regulation and supervision of financial institutions both banks and nonbank be integrated, including the regulation and supervision of sharia financial institutions in which there is sharia Islamic Banking. One of the principles of Islamic banking, as stated in Law No. 21 of 2008 concerning Islamic Banking is the Principle of Economic Democracy. In the implementation of the principle of economic democracy that the FSA has a significant role in pushing the Islamic banking institution to utilize its resources to promote the local economy, especially groups of people whose economic access is still minimal. In 2014, the FSA issued Regulation No. 19 in relation to inclusive finance. In these regulations, the FSA encourages banking institutions to provide banking services to people who have been marginalized through the branchless bank program. This POJK  applies to both conventional banking and Islamic banking. Some conventional banks have been undertaking this program with a wide range of dynamics. Some Islamic banks have been also undertaking it, while others are still at the preparation stage. This paper will analyze the regulations issued by the FSA in order to encourage Islamic banking institutions in actualizing the principle of economic democracy, especially in relation to inclusive finance program. The research method used in this article is normative juridical with the support of primary source through the FSA.Abstrak: Berlakunya Undang-Undang Nomor 21 Tahun 2011 tentang Otoritas Jasa Keuangan (OJK) menjadikan pengaturan dan pengawasan Lembaga Keuangan baik Bank maupun Nonbank menjadi terintegrasi, termasuk pengaturan dan pengawasan Lembaga keuangan syariah yang di dalamnya terdapat Perbankan Syariah.  Salah satu asas Perbankan syariah sebagaimana tertuang dalam Undang-Undang No. 21 tahun 2008 tentang Perbankan Syariah adalah Asas Demokrasi Ekonomi. Dalam implementasi asas demokrasi ekonomi tersebut OJK memiliki peran signifikan dalam mendorong lembaga perbankan syariah untuk mendayagunakan sumber daya yang dimiliki untuk memajukan ekonomi masyarakat terutama kelompok masyarakat yang secara akses ekonomi masih minim.  Pada tahun 2014 OJK mengeluarkan Peraturan OJK No 19 terkait dengan keuangan Inkusif. Dalam peraturan tersebut OJK mendorong lembaga perbankan untuk memberikan layanan jasa perbankan kepada masyarakat yang selama ini termarginalkan melalui program Laku Pandai. POJK ini berlaku baik untuk perbankan konvensional maupun perbankan syariah. Beberapa bank konvensional sudah meakukan program ini dengan berbagai macam dinamikanya. Sementara itu bank syariah juga sebagian ada yang sudah menjalankan sementara yang lain masih pada tahap persiapan. Tulisan ini akan menganalisis peraturan-peraturan yang dikeluarkan OJK dalam mendorong lembaga perbankan syariah dalam mewujudkan asas demokrasi ekonomi terutama terkait dengan program keuangan inklusif. Metode penelitian pada penelitian adalah yuridis normatif dengan dukungan data-data primer melalui pihak OJK.Keywords: Banking service, economic, financial, democracy.

Relationship Analysis of Islamic Banking between Malaysia and Pakistan

2018 ◽  
Vol 5 (4) ◽  
pp. 1-6
Author(s):  
Khurram Faisal Jamal
Keyword(s):  
Large Range ◽  
Primary Objective ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Relationship Analysis ◽  
Banking Institutions ◽  
Qualitative Technique ◽  
Performance Problem ◽  
Very High ◽  
Product Preference

Islamic banking is basically a system of financial intermediation, its primary objective is to avoid receipt and payment of interest. Islam does not only prohibit dealing with interest but also with liquor, pork, gambling, pornography and any other thing which are considered haram according to Shariah. The objectives of the research is to study and describe the Islamic financing techniques used by Islamic banking institutions in Malaysia and Pakistan. For this research seven variables Promotion, Product, Preference, Knowledge, Performance, Problem and Infrastructure was taken. Qualitative technique was used to answer the research objective. The findings of research indicate that lack of awareness of Islamic banking is very high in Pakistan as compared to Malaysia. A few promotions were used by Islamic banks in Pakistan while in Malaysia customers are knowledgeable about Islamic banking because banks promote them aggressively. There is a need of government and education sector support to promote Islamic banking in both countries. The study also found that Islamic banks in Malaysia have large range of products as compared to Pakistan. The practitioners from both countries are agreed at this point that BBA, Ijarah and Murabaha are more profitable and less risky than Musharaka and Mudaraba. The Islamic banking products are almost used for same purposes in both countries while some differences are also exists.  Keywords: Islamic Finance, Comparative Study, Malaysia, Pakistan

scholarly journals Standard Quality Banking Services of Islamic Banks

2018 ◽  
Vol 8 (1) ◽  
pp. 301
Author(s):  
Haneen A. Al-Khawaja ◽  
Barjoyai Bardai
Keyword(s):  
Islamic Law ◽  
Theoretical Aspect ◽  
Islamic Banking ◽  
Islamic Banks ◽  
High Confidence ◽  
Banking Services ◽  
Standard Quality ◽  
Definition Of

This research discusses in detail the theoretical aspect of the quality standards of banking services of traditional Islamic banks. The criterion of "Shari'ah Compliance" was added by the researcher to the importance and role of dealing with Islamic banks, the definition of this standard and its importance, how to test it for banks as well as how, without the legitimate commitment of these banks to what is classified as Islamic from the foundation, we focus on the importance of the existence of a legal commitment to any Islamic bank to achieve the quality of Islamic banking services of high quality in accordance with Islamic law and laws to achieve a high confidence in the customers who belong to him and deal with his Conspiracy.

Determinants of Financial Inclusion in Namobuddha Municipality, Nepal

2021 ◽  
Vol 5 (1) ◽  
pp. 60-74
Author(s):  
Jeetendra Dangol ◽  
Anil Humagain
Keyword(s):  
Financial Literacy ◽  
Financial Services ◽  
Control Variable ◽  
Financial Innovation ◽  
Sampling Technique ◽  
Financial Inclusion ◽  
Gender Education ◽  
And Control ◽  
Moderating Role

Financial inclusion is a priority agenda in countries like Nepal. The study seeks to determine the access to financial services, financial innovation and quality of financial services to the financial inclusion.The study is based on questionnaire surveydata with363 household respondents using a convenient sampling technique, and carried out in Namobuddha Municipality of Nepal. The moderating effect of financial literacy and control variable of demographic items have been analysed using generalised regression model. The results show that financial innovation and quality of financial services are the significant determinants of financial inclusion; financial literacy is found significant and it plays a moderating role between the variables under study. The findings revealed that the tendency of higher level of financial inclusion was influenced by gender, education level and monthly income.

Design Analysis of CIMB Bank’s Website

2013 ◽  
Vol 66 (1) ◽  
Author(s):  
Muhammad Ridhwan Ab. Aziz ◽  
Mohammad Mahbub Alam Noorizzuddin Nooh
Keyword(s):  
Design Analysis ◽  
Islamic Banking ◽  
Website Design ◽  
Islamic Banks ◽  
Future Researcher ◽  
Market Shares ◽  
The World ◽  
Banking Institutions ◽  
Banking Institution ◽  
Conventional And Islamic Banks

Islamic banking has emerged in recent decades as one of the most important trends in the financial world, side by side with conventional banking. Website design has become a very powerful tool in disseminating information of a particular banking institution and this phenomenon has been fully utilized by both conventional and Islamic banks throughout the world. The purpose of this article is to analyze website design of CIMB Bank that offers both conventional and Islamic financing facilities. The methodology employed in this article is qualitative in nature through examining the websites of CIMB Bank. The finding shows that CIMB Bank needs to improve their both website designs in order to attract more customers to their websites and give true information with regard of their products and services. It is further suggested that future researcher tries to explore more in-depth website designs in terms of products and services provided by the conventional and Islamic banking institutions in order to increase their market shares. 

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